Mercury Sues Partner Lenel

By Ethan Ace, Published Sep 06, 2011, 12:00am EDT

Major access control OEM Mercury Security has filed a lawsuit against leading access control provider Lenel for multiple counts of copyright infringement. This is very surprising as the two companies have been key partners for more than a decade and litigation is generally the last means partners take to resolve disputes. In this note, we examine the lawsuit, the claims made and the technical issues undermining this litigation.

The Claims

For background, members may read the full 12 page complaint Mercury filed against Lenel on July 7, 2011 in NY District Court.

The root of Mercury's claim against Lenel is infringement of two of its copyrights (TXu-1-732-040 and TXu-1-746-844), which constitute the Mercury Protocol used by access control platforms to communicate with Mercury products. This consists of what Mercury refers to as their Simple ID and Extended ID Report codes.

Mercury claims breach of their OEM contract with Lenel. The complaint cites a series of OEM agreements from 2001, 2006 and 2010. Mercury claims that "Lenel was provided with a qualified and limited right to gain access to source code and confidential information". According to the claim, Lenel has used Mercury's protocol without permission, to create their own line of controllers which replace components Lenel previously OEM'd from Mercury. These new controllers are referred to as Lenel's "Universal" line.

Mercury claims that Lenel's new Universal line support Mercury's Simple ID and Extended ID Report codes which they contend violates their copyrights.

The new Lenel line replaces the older Mercury OEMed line. The Lenel Universal line is comprised of four products: the LNL-1320-U [link no longer available] two door interface, the LNL-1300-U single door interface, the LNL-1200-U output interface, and the LNL-1100-U [link no longer available] input interface. These replace the non-Universal models (the same model number without the U) which were OEM'd from Mercury, models MR52, MR50, MR16out, and MR16in, respectively.

Interestingly, Mercury has instituted a "Mercury Powered" program which licenses this protocol. Keri was one of the first to implement this protocol in their NXT panels [link no longer available]. It would be interesting to understand why Lenel did not choose to license the protocol especially in the face of this litigation for copyright infringement.

In an undated letter from Lenel's President to their VARs on their Open Architecture Strategy, Lenel states, "We have also recently introduced an alternative set of I/O modules (Lenel Universal IOs) that are fully compatible with ALL present versions of our OnGuard Platform and will be fully compatible with future versions as well."

Impact on the Industry

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The most interesting aspect of this suit is that it involves two of the access control industry's largest players. Lenel is one of the world's largest access control vendors, used in thousands of installations, including 92 of the Fortune 100, according to Lenel. Mercury (along with HID) is one of the top OEM providers in access control, supplying equipment to a number of different manufacturers. 

The case is currently in the legal system at the beginning of litigation. We would assume the companies would look to settle rather than wage a long court battle but we have no inside information on any negotiations.

[Update 2012: The case has been settled.

The crux of issue was Lenel's sale of Mercury compatible 'psuedo-equipment' (UIOs) that encroached on Mercury patents and proprietary designs. After a period of escalation on the issue, executive leadership at Mercury and Lenel reconciled on the issue, with Lenel agreeing to discontinue marketing and support of the equipment in question save for a few systems.

The companies together have collectively renewed agreements and continue to partner, citing a the rekindled partnership good for '10 (or more) years'.

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